BIR Ruling

April 21, 1967 Mr. Demetrio Sibayan Barrio Madayegdeg San Fernando, La Union S i r : This refers to your letter dated April 10, 1967 stating the following: "Please be informed that I am an authorized contractor of the United States Information Agency at its Station here at Poro Point, San Fernando, La Union. My contract covers the supplying of labor and the supervision in connection with the upkeep of buildings and grounds of the Base. In support hereof, I am enclosing for your ready reference photostat copies of the Statement and Certificate of Award, Contract with the American Embassy and the Schedule of Supplies or services. LibLex "In view thereof, may I have the honor to request exemption from the payment of the 3% contractor's percentage tax in accordance with the P.I.-U.S. Military Bases Agreement (43 O.G. No. 3), as supplemented by the exchange of notes between the two governments on December 29, 1952." In reply, I have the honor to inform you that pursuant to the P.I.-U.S. Military Bases Agreement as supplemented by the exchange of notes between the Philippine and U.S. Governments on December 29, 1952, only receipts from contracts or constructions authorized by the U.S. Military Forces and are exclusively destined for the operation, maintenance and defense of the bases are exempt from the contractor's tax. It appearing that the contractee with whom you entered into a contract is the U.S. Information Agency and the services you render are not for the operation, maintenance and defense of the U.S. Military Bases, you remain subject to the 3% contractor's tax prescribed in Section 191 of the Tax Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue